Tight Budget? Hold Off on Airline Credit Cards

If money is tight but travel is your passion, then airline credit cards might not be the best fit for you right now. It’s a common misconception that enrolling in an airline credit card will fast-track your journey to your next dream destination. In reality, it’s best to skip them until your financial situation improves.

Here’s why: Airline credit cards are truly beneficial for those who are financially stable and can comfortably manage the potential risks. These risks include annual fees, which can add up over time, and potentially high interest rates if you don’t pay your balance in full each month. It’s important to remember that free airline credit cards, while tempting, often take a very long time to accumulate enough points for worthwhile rewards, and they typically lack any significant perks.

Airline credit cards can often lead to lifestyle changes. Those who are struggling financially might overlook these potential shifts in spending habits. For example, some cards require a certain amount of spending per month to qualify for bonus points or rewards, which can be a recipe for overspending if you’re not careful and fall into addictive behaviors.

Airline credit cards are for those doing well financially

If you’re in a good financial position, with a steady, well-paying job that allows you to pay your credit card debt in full each month, then an airline credit card can be a fantastic tool to accelerate your travel plans. It can also unlock a variety of benefits typically associated with many credit cards, such as free checked bags, earning bonus points on everyday spending, discounts on airfare, and even free anniversary miles. These are just some of the great perks you can enjoy as a responsible credit card holder.

Airlines Credit Card Recommendation

Easily the top airline credit card that I can recommend for those who are actively looking are the United Airlines Explorer card, Southwest Rapid Reward card and Alaska Visa Signature card. These cards have a great reward program, allow for free carry-on among other perks.

• United Airlines Credit Cards

• Southwest Rapid Rewards Cards

• Alaska Visa Signature Card

TLDR

If you are on a tight budget and aren’t well off, skip the airline credit card and instead sign up for a no annual fee cash back credit card. An example of this is SoFi Unlimited 2% cash back with no annual fee and no foreign transaction fee.

If you are doing well off financially and have no credit card debts, an airline credit card can be a great tool for you to use to go on your vacation faster and enjoy some sweet perks.

Reasons to avoid airline credit cards

Annual Fees

If you are on a tight budget, an airline credit card annual fee is something you want to avoid. That money can be used more appropriately like for your daily expenses or paying down your current debt. As much as I love traveling and writing about it, I know that traveling is a luxury and should be treated as a reward for your hardwork and keeping your finances in order. Some airline credit cards can lure you in with exciting perks like lounge access, 10,000+ annual bonus points, or free check bags for all flights but take a look at that annual fee. Nothing in this world is free. It’s any business job to lure in potential customers (such as yourself) and to have them stay as long as possible.

If you don’t pay the annual fee or are delinquent on your interest payment, that will affect your credit score, which makes it harder for you to take out a loan in the future.

Not taking advantage of the perks

If you are on a tight budget, you won’t be able to take advantage of the perks that an airline credit card has simply because you can’t afford to use the credit card regularly and gain points/miles. All the perks and features you see on any airline credit card are there to reward their loyal customers or big spenders. If you aren’t able to fulfill this, you will be paying an annual fee but not taking advantage of the perks the credit card has. Basically you are throwing money into a trash can and lighting it on fire.

LifeStyle change will ruin you

When you have a credit card that you are paying an annual fee for, you will want to utilize it to get your money back by taking advantage of the included features, services and perks. Lifestyle change will occur and you will be spending more money to make use of the airline credit card. Also these “points” or “miles” you earn with every purchase is a way to gamify your spending by making it look like you are taking “steps” to reach your travel goals. This makes shopping more like a game and with each purchase, you earn points. Sometimes, with certain airline credit cards, there are even specific categories or events where you can earn triple points or miles. This essentially makes spending feel more rewarding, as you can see how your purchases bring you closer to that free trip, lounge access, or coveted business class upgrade you’ve been wanting for a while.

For people on a tight budget, do this instead!

If you’re on a tight budget, then instead of enrolling in an airline credit card, I would strongly recommend focusing on improving your overall financial health. It might seem unusual to see a blogger or article offering this advice, because it means some readers won’t sign up for credit cards, resulting in no commission for the writer. However, I believe in telling the truth. The best course of action is to work on getting your financial situation in order. This includes eliminating your debt and potentially pursuing career opportunities that offer a higher income before considering an airline credit card. It’s important to understand that if you’re struggling to pay your bills on time, then airline credit cards aren’t the right fit for you at this moment. Instead, I recommend signing up for a cash back credit card with no annual fee. This type of card allows you to build your credit score while earning easy cash back, typically around 2%. Plus, you won’t have to worry about any annual fees.

Key Takeaways

For many of us who love to travel, having an airline credit card can seem like the perfect way to accelerate our journey towards our next vacation. However, this isn’t necessarily true for everyone, especially those on a tight budget who might be struggling to pay off existing credit card debt. For these individuals, staying far away from airline credit cards is the wisest course of action. The priority should be on improving their overall financial health. While I wholeheartedly encourage everyone to travel, including myself, it’s crucial to take care of your finances first. Once your financial situation is in order and you have some extra money available to spend each month, then an airline credit card can become a fantastic addition to your wallet.

Don’t be pressured by flashy advertisements or influencers promoting airline credit cards. Wait until your financial situation improves before taking the plunge and getting one yourself.